FOREX PRO WEEKLY, March 13 - 17, 2017

[Sive Morten]

Fundamentals

(Reuters) - The euro hit a more than four-week high against the dollar on Friday after a report that the European Central Bank had discussed the possibility of raising interest rates before the end of its quantitative easing program.

Sources told Reuters some ECB policymakers had suggested hiking rates from their current record lows before the end of QE stimulus, but that the discussion was brief, and the idea did not have broad support.

"I have no idea whether the reports are correct or not but it shows where we are," said Axel Merk, president and portfolio manager at Merk Hard Currency Fund in Palo Alto, California.

"It shows that the discussions (at the ECB) are leaning towards, 'How do we get out of QE?' ... There's been a fundamental shift, but it's a fundamental shift that's been gradually sinking in."

Merk noted multiple reports from euro zone countries supporting the premise that the economy is gaining traction. The ECB raised its growth and inflation targets for the euro zone in 2018 following its March meeting Wednesday.

The euro rose more than 1.1 percent against the dollar to a high of $1.0698, its strongest since Feb. 9. It was the euro's largest one-day gain since June 3, 2016. That helped the continental currency to its second consecutive weekly gain against the dollar.

The dollar index, which tracks the greenback against six major world currencies, fell to its lowest since Feb. 28.

The index fell 0.34 percent for the week, its first weekly loss in five weeks.

The dollar also was weighed down by the February U.S. non-farm payrolls report that showed wages rose less than expected. That tempered expectations for a spate of interest rate increases this year by the Federal Reserve.

"Once again the wage number continues to overshadow," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington. "And with wages rising in lackluster fashion, that has tempered expectations for the Fed to raise rates at a faster pace this year."

Fed fund futures prices showed investors see a 93 percent chance of an increase in U.S. overnight interest rates this month, according to CME Group's FedWatch tool. But that number was close to 90 percent before the data was released.

The greenback was slightly lower against the yen after touching a seven-week high of 115.50 yen. The dollar last traded at 114.78 yen. For the week, it fell 0.2 percent, its first weekly fall in four.

US jobless claims at new 43-year low – what it means
by Fathom Consulting (report of March, 6)

The ongoing decline in US jobless claims is striking, but they are not as useful as a barometer for the US labour market as they once were.

US unemployment insurance is capped at 26 weeks and with long-term unemployment still elevated, the unemployment benefits of many have simply expired. This might explain why the ratio of continuing claims to total unemployment is close to the lowest on record, as highlighted by the chart below.

Short-term unemployment, by contrast, is close to a 40-year low, explaining the impressive declines in initial jobless claims. If structural unemployment has risen, those already in work should be able to command higher salaries. With wages rising, business and consumer confidence high, and a fiscal splurge on the horizon, we think that the Trump reflation trade still has legs.

In a speech on Friday evening, Janet Yellen gave a very clear signal that the Federal Open Market Committee would raise the fed funds rate when it meets next week. With this in mind, we now expect three 25 basis point increases in the fed funds rate this year, compared to our previous forecast of two. We still expect four 25 basis point increases next year.

Although the Committee now appears set to tighten sooner than we had previously imagined, one additional 25 basis point increase will not have a material impact on GDP growth or inflation. In other words, we still think that the Fed will let the economy run a little hot. Indeed, based on our revised forecast, real economic growth and inflation will still exceed 3% in 2017 and 2018, and the real fed funds rate will remain negative for the foreseeable future.

On this basis, we still anticipate further increases in the US dollar, US Treasury yields and US equities.

COT Report

CFTC data shows nothing special. In last 3-4 weeks we do not see any strong dynamic. Yes, overall position is changing, but not drastically and rather weak. Still on 7th of March we see that net short position has increased. This has happened despite well-expected good NFP release and rate hike on 10th of March. Although change in speculative position was shy, it could mean that current rally is mosty technical and could last for a short time only. At least, CFTC data and recent uspide EUR rally shows opposite direction.

Technical
Monthly

So last week action was rather dramatic. As we've discussed in our daily videos - technical context was not sufficient for taking long position, while fundamental background was mostly uncertain. As a result, EUR has jumped mostly on surprising hawkish tones in Draghi speech, rumors of possible rate hike in EUR prior ending of QE and mismatch of US wage growh to expectations in NFP report. These three factors have pushed EUR higher.

Still, CFTC data, Fathom consulting opinion suggest that this is temporal behavior, mostly speculative reaction on short-term events.

Monthly chart mostly stands the same as it is too large for daily action. Price continues it's coiling around YPP.

On large scale we mostly agree that that fundamental background mostly looks bearish for EUR/USD for 2017-2018. Potentially more hawkish Fed policy, ECB QE prolongation, coming elections in many EU countries, bringing more uncertainty. After GB, separatistic sentiment start to appear in other countries of EU, as Italy, France, Netherlands, Spain that are not satisfied with Brussels domination in governing EU.

Speaking on big picture, On a way down, guys, EUR has passed through all major Fib levels. Last one was at 1.12 area and now we do not have any other ones below current market. Also price has dropped below 1.27 extension of this big butterfly. Thus, on monthly chart the only logical destination point stands at parity - 1.618 butterfly extension, chanell trend line support and YPS1.

Besides, right now EUR is testing YPP, but unsuccessfully yet.

Also take a look at different behavior near low border of channel. Previously when market has touched it - it shows immediate upside pullback, it was V-shape reversal. Right now behavior is absolutely different, price just hangs on the border and shows no upside action. Any tight consolidation near trendline could become a sign of coming breakout.

Thus, based on monthly chart we could make two major conclusions. First is - real bullish trend could be re-established only if EUR will erase reversal candle and overcome its top above 1.16. Our next target on Monthly chart is parity - 1.618 Butterfly extension, YPS1 and trendline support.

In general guys, we think that steps that already have been announced by ECB and Fed should be enough to push EUR right to parity during "price-in" process, when market will "anticipate" them. But this picture is not static, it's dynamic. And iti will depend on real action from Fed, Trump administration and ECB.

Nevertheless, right now we do not see any criminal action that could invalid our existed analysis. Price has not broken yet overall bearish tendency here.

Really long-term Bullish perspectives

Concerning bullish perspectives... they exist here, but they stand at even larger picture:

Picture shows classical action. Take a look that since 1999 - EUR was forming upside reversal swing that lasts till Dec 2007. Now market stands in deep retracement - this is typical action as new upside reversal swing has been formed. Based on this picture EUR is approaching to area where this retracement should over and it could get chance to starts extension leg of bull trend that could lead EUR as far as to 1.76-1.82 area. Also you could recognize here some signs of reverse H&S pattern. That's why on big weekly picture we also have made a suggestion on big H&S pattern with head around parity....

Weekly

As market shows strong reaction on Fed promising of rate increase, let's talk on bullish perspectives that could be based on this event. Last week we said that we're coming to 2-week doom&gloom. First week of NFP release is completed. Based on passed week rally, we already see how dramatic it was. Despite good NFP data (at first glance), EUR has jumped higher.

Second one of Fed decision is yet to be started. Here investors will watch not on rate hike itself, but on comments. What Yellen will say about perspectives. The major task to keep existed tendency is to get confirmation that 2 more rate changes are still on the table.We think that this is consensus expectation. Thus, depending on how real comment will flirt around consensus will determine FX market behavior. That's why we think that our 2nd week also could bring a lot of doom&gloom action.

So, let's see what could happen. Right now on a way up EUR has reached 1.0830 - 3/8 major resistance, tested YPP and now we're watching whether price will form AB-CD upside action or retracement will be limited by just single leg up. Honestly speaking, here, even reaching of 5/8 resistance is acceptable. It means that if our daily H&S pattern will work and EUR will reach 1.10 area - this will not erase yet long-term bearish picture. Besides, 1.08-1.09 range is rather strong, since it's weekly K-resistance, that also is Agreement and includes YPP. Hardly profit taking process that we see right now will be sufficient to break it through.

It means that upside retracement could just re-test 1.0830 level and complete minor 0.618 AB-CD target.

On a way down our final destination stands the same - 1.618 point coincides with 1.618 butterfly target around 0.97-1.0 area. Although we have multiple targets inside 1.0-1.05 area, ther are all minor ones.

Finally, butterfly could become part of large reverse H&S pattern, that we have discussed above. But whether it will be formed or not will depend on fundamental factors, D. Trump ficsal policy, US economy data and Fed reaction. And this figure is the one of longer-term.

Thus, we have more or less single road to parity, but later, around it we will get a crossroads...If there will be something bearish that wasn't priced in yet - EUR could drop even further. If not - H&S will start to form...

But while market stands above 1.05 - we have no choice but continue journey with upside retracement. THe minimal target that it could meet is re-testing of 1.0830 level.

Daily

So, on Friday our major comment was - "bullish context exists, but it looks not suffcient for taking long position." So, we said, if you feel confidence you could try... But in reality this bet still was on fundamental surprise. First is ECB comments, second - weaker than expected wage growth (low inflation).

Despite the reasons that have pushed EUR higher - it was able to keep daily reverse H&S pattern and start upside action after right shoulder's lows have been formed. Our bullish grabber has worked nice.

As we've estimated, next target should be neckline that is based on 0.618 AB-CD extension @ 1.08 area. This is also our well-known Fib level and YPP. Price right now stands at overbought. That's why in the beginning of the week, some technical retracement could happen.

Intraday

On 4-hour chart we also see that EUR stands at our 1.07 resistance and completed AB-CD target (slightly even exeeded). So, we have daily OB, Fib level and AB-CD target resistance. 1.618 extension stands around 1.0760 area.

Technical sutiaton on intraday charts suggests retracement on Monday. At the same time it should not be too deep. Fib levels' tree shows that most suitable level stands around WPP and K-support of 1.0620-1.0630. If market is really bullish, upward action should continue somewhere around this level. Thus, we will watch for bullish reversal patterns there:

Conclusion:

Despite changing of short-term sentiment, we do not think that it brings some real hazard to long-term bearish tendency yet. Thus, right now it is better to treat it as retracement as fundamental background slightly has changed.
Most part of the week we probably will deal with this upside action and preparation to Fed meeting. On Monday chances on minor pullback to 1.0620-1.0630 area are rather high.

The technical portion of Sive's analysis owes a great deal to Joe DiNapoli's methods, and uses a number of Joe's proprietary indicators. Please note that Sive's analysis is his own view of the market and is not endorsed by Joe DiNapoli or any related companies.

 

[Sive Morten]

Good morning,

(Reuters) - The dollar inched up against a basket of currencies on Tuesday as U.S. Treasury yields extended their rise ahead of an expected interest rate rise by the Federal Reserve.

The euro pulled back from one-month highs after dovish-sounding comments from European Central Bank officials tempered its recent surge.

With a rate increase already seen as a done deal, investor focus was on what kind of a message the Fed would deliver after its two-day meeting starting later on Tuesday.

"The latest rise in Treasury yields is underpinning the dollar, but it is a wait-and-see mood that is mostly prevailing in the market ahead of the Fed's decision," said Shin Kadota, senior currency strategist at Barclays in Tokyo.

"Expectations for a hawkish dot plot was a factor that has pushed up the dollar recently, with hopes for the number of times the Fed could hike rates this year having increased to four from three."

The "dot plot" is policymakers' rate projections and provides a view into their interest rate outlook.

The dollar index against a group of major currencies was up 0.1 percent at 101.410, adding to modest gains made the previous day.

The U.S. currency was steady at 114.850 yen, having gone to 115.510 on Friday, its highest since Jan. 19.

The euro was effectively flat at $1.0651.

The common currency had climbed to a one-month high of $1.0714 on Monday, boosted after some members of the ECB's Governing Council discussed the possibility of higher interest rates at last week's policy meeting.

But its rise was tempered later on Monday after ECB Governing Council member Jan Smets reportedly said last week's policy meeting was not a signal of coming policy change. Bank of France Governor Francois Villeroy de Galhau also said rising inflation in the euro zone was highly exaggerated.

Caution ahead of upcoming elections in Holland also capped the euro. The Dutch will vote on Wednesday in an election that was seen as a test of anti-immigrant sentiment.

"The market faces a series of event-related risks. It's hard to predict whether that would be the Dutch elections, the Fed policy decision, (U.S. President Donald Trump's) budget proposal or the G20 meeting, but the dollar faces significant downside risks," said Masashi Murata, senior strategist at Brown Brothers Harriman in Tokyo.

Murata added that recent expectations for four U.S. rate increases this year looked excessive, and that the Fed meeting could help cool exaggerated policy tightening expectations.

The Trump administration's fiscal 2018 federal budget plan will be released on Thursday, and G20 finance ministers and central bankers meet in Germany on Friday.

Sterling was a touch lower at $1.2200, its rise overnight stalling after parliament passed a legislation giving British Prime Minister Theresa May the power to begin the EU exit process. May has now cleared the final hurdle standing between her and the start of the divorce talks.

The pound had gained 0.4 percent overnight after Scotland's First Minister Nicola Sturgeon demanded a fresh Scottish independence referendum but said it should take place at the earliest in late 2018.

The Australian dollar was down 0.15 percent at $0.7561, giving back some of the previous day's gains made when the dollar stumbled against the euro.

The 10-year U.S. Treasury note yield was at 2.616 percent after rising overnight to 2.628 percent, its highest since mid-December.

So, markets are waited for Fed speech. EUR has turned to retracement, as we've suggested in weekly research, but has not reached yet our predefined K-support area. Thus, today it makes sense to take a look at somthing else, for example JPY.

We do not talk on JPY for a long time already, but those of you who follows JPY - know that it has huge bearish engulfing pattern on monthly chart. Action that we see right now in fact is retracement back inside it's body. This is very typical action for engulfings. It means that as soon as this retracement will be completed - extension leg will follow to the downside.

That's being said, our task here is try to catch the moment when and where this reversal point could happen. Usually engulfing price action takes the shape of AB-CD pattern on lower time frame chart:

Currently it seems that reversal could happen around 116-116.30 area. This is solid daily resistance - Fib level and WPR1, butterfly 1.27 extension also stands there.

On 4-hour chart yen could prepare reversal moment by forming 1.618 3-Drive "sell" pattern. It is also has completion point around 116.10 area:

Fed speech could provide neccesary price push and 3-Drive will be completed. So let's keep watching, if everything will happen as we are suggested, then it could become nice chance for short entry.

 

[Sive Morten]

Good morning,

(Reuters) - The dollar wobbled in a narrow range in Asian trading on Wednesday, as investors waited anxiously to see what clues the U.S. Federal Reserve would soon reveal on its monetary policy outlook.

With the futures market pricing in more than a 90 percent chance that it would raise interest rates, investors' main focus turned to what the Fed's statement on Wednesday will say about the pace of hikes this year.

"With a rate increase already priced in, we will be watching to see whether the Fed gives any hints about changing its outlooks for inflation or growth," said Kumiko Ishikawa, FX market analyst at Sony Financial Holdings.

"There is a small chance the Fed will signal plans to raise rates four times instead of three this year, which would lift the dollar," she said.

Against its Japanese counterpart, the greenback edged up 0.1 percent to 114.81, remaining shy of last week's peak of 115.51, which was its highest level since Jan. 19 as expectations built for the rate increase.

"I think the dollar might have trouble above the 115 level today, with Japanese exporters still seeking to sell above it ahead of the end of the Japanese fiscal year this month," said Kaneo Ogino, director at foreign exchange research firm Global-info Co in Tokyo.

"Of course, everyone is waiting for the Fed, so we're expecting range-bound trading until we get some clear signals about expectations for the rest of the year," he said.

U.S. inflation data overnight cemented rate hike expectations. U.S. producer prices rose more than expected last month, marking the most robust year-on-year gain in nearly five years.

The Bank of Japan also began a two-day monetary policy meeting on Wednesday. It is expected to hold its policy steady and stress that inflation is nowhere near levels that justify talk of withdrawing its massive stimulus.

Sterling nursed its losses after tumbling to an eight-week low of $1.2110 in the previous session, amid worries about a prolonged and painful process of the UK's exit from the European Union. It was last steady on the day at $1.2166.

British Prime Minister Theresa May won parliamentary backing on Monday to begin the process of leaving the EU and start two years of talks that will shape the future of Britain and Europe, as Scotland mulled a possible second independence referendum.

The euro edged up 0.1 percent to $1.0614 . It remained below its Monday high of $1.0714, which was its loftiest perch since early February, as concerns about a Dutch vote offset market speculation that the European Central Bank could be poised to wind down its stimulus program.

The Netherlands will vote on Wednesday in an election that was seen as a test of anti-immigrant sentiment, even before a rift with Turkey at the weekend put immigration and nationalism at the top of the political agenda.

The dollar index, which tracks the greenback against a basket of six rival currencies, was flat at 101.71.

So, while we're waiting for Fed statement, we continue to take a look at other currencies that we haven't taken a look at for a long time already. Yesterday it was JPY, today we will take a look at NZD.

On EUR, guys, nothing interesting yet - it has dropped to our predefined level (and even lower, to major 50% support), but it hasn't formed yet any pattern. So actually, it is nothing to discuss there yet...

On NZD, although long-term picture looks bearish, on daily chart we could get tactical bullish setup that could take a shape of DRPO "Buy". The major pattern here is 1.618 AB-CD and it's target has not been hit. Objective point stands below previous lows, which means that price could form some kind of W&R here:

This is the first part of our trading plan - wait for reaching of 0.6850 target.

On Intraday chart downward action could take a shape of 1.618 butterfly, that has target at the same area. Also this is WPS1. Existence of butterfly makes our task easier, as we could take position right around 0.6850 as butterfly will be completed and anticipate DRPO confirmation. At first upward reaction to 0.6850 we will have to move stop to breakeven:

If DRPO will be formed, target will stand around 0.7050 - 50% of downward thrust.

 

[Sive Morten]

Good morning,

(Reuters) - The euro stood tall on Thursday after Dutch election exit polls pointed to a comfortable win by the prime minister over his far-right rival, while the dollar wallowed at a one-month low after the Federal Reserve sounded less hawkish than anticipated on future rate rises.

The euro climbed to a five-week high of $1.0746 on Thursday, after surging 1.2 percent overnight.

The common currency was boosted as exit polls showed the Netherlands' center-right Prime Minister Mark Rutte roundly saw off a challenge by anti-Islam, anti-EU Geert Wilders in an election on Wednesday, alleviating concerns towards Holland opting to leave the EU.

"The euro's rise was an initial reaction to the Dutch exit polls and the currency could rise further when the European 'mother market' comes into session later in the day," said Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo.

"How much further support the euro can garner would depend on how the Dutch vote could now impact the French presidential elections, for example by eroding support for (Marine) Le Pen. We could see the euro gain further if spreads between French and German government bonds tighten today."

The dollar index against a basket of major currencies was down 0.2 percent at 100.560.

It slid more than 1 percent the previous day to touch 100.490, its lowest since Feb. 17.

The greenback took a knock after the Fed ended its two-day policy meeting on Wednesday by increasing interest rates as expected but stuck to projections of three total rate hikes in 2017.

Some traders had begin to suspect it would raise rates four times this year as the economy builds up steam.

U.S. Treasury yields fell sharply in reaction to the Fed's rate view for the rest of the year, prompting the dollar to fall more than 1 percent against the yen. The dollar, which went as high as 115.195 yen earlier this week, last stood at 113.420.

"Speculation of four rate hikes this year may have been excessive. The dot plot was left mostly unchanged, shaking out expectations among dollar bulls that had gone too far," said Koji Fukaya, president of FPG Securities in Tokyo.

The "dot plot" reflects Fed policymakers' interest rate projections.

The yen showed little reaction after the Bank of Japan stood pat on monetary policy and kept the 10-year government bond yield target of around zero percent, as the central bank's decision was well anticipated.

The focus is now on BOJ Governor Haruhiko Kuroda's post-meeting briefing at 0630 GMT for clues on the central bank's stance on whether and when to pull back its massive stimulus program.

Hours after the Fed's rate hike, China's central bank on Thursday raised short-term interest rates for the third time in as many months, a day after the end of the annual session of parliament where leaders warned that tackling debt risks would be a top policy priority this year.

The Chinese yuan weakened to 6.87 per dollar, after strengthening to 6.8455 after the Fed's policy decision.

The pound was 0.2 percent lower at $1.2267 after jumping 1.1 percent overnight. Sterling managed to pull away from a two-month low of $1.2110 struck Tuesday on fears of prolonged political jousting over Brexit terms.

The Swiss franc was steady after gaining about 1 percent against the dollar the previous day.

The Bank of England and the Swiss National Bank are due to make policy decisions later in the day, with both central banks expected to stand pat on monetary policy.

The Australian dollar gave back some its large gains made the previous day against the slumping dollar, hit by weaker-than-expected local employment data.

The Aussie was down 0.3 percent at $0.7687 following its overnight surge of 2 percent to a three-week high of $0.7720.

The New Zealand dollar slipped 0.5 percent to $0.7006 after indicators showed the local economy expanded less than forecast in the final quarter of 2016. The kiwi had risen to a 12-day peak of $0.7050 the previous day.

So, as Fed moved rate higher but has given no hint on more aggressive policy brings relief to markets. From technical point of view it means that we could focus right now on our daily target - 1.08, that we've specified in weekly research. It is based on large daily AB-CD pattern.

In general 1.08 area is very strong resistance that includes MPR1, Fib level, YPP, AB-CD target and daily overbought. It could be reached till the end of the week, but hardly market will break it easily. Actually, this is neckline of our H&S pattern. And on it's breakout will depend future EUR performance:

On 4-hour chart we also have minor target - 1.618 of our H&S pattern:

THus, it seems that we mostly have a deal with this butterfly pattern. Right now market has reached WPR1 and 1.27 target, so, some minor pullback is possible within few hours. But today -tomorrow EUR probably should complete 1.618 target of butterfly and simultaneously daily 0.618 AB-CD target:

 

[Sive Morten]

Good morning,

(Reuters) - The dollar licked its wounds in Asian trading on Friday, wallowing at five-week lows against a currency basket and on track for weekly losses after the U.S. Federal Reserve signaled fewer interest rate hikes than some investors had expected.

Although the U.S. central bank delivered an interest rate increase on Wednesday as widely expected, it did not alter its original forecast for two more rate increases this year. That disappointed dollar bulls who had hoped for hints of a possible fourth hike in 2017.

The dollar index which gauges the greenback against a basket of six major rivals, edged down 0.1 percent to 100.25, plumbing its lowest level since Feb. 9 and down 1 percent for the week.

Against the yen, the dollar was flat on the day at 113.35, down 1.3 percent for the week ahead of a Tokyo public holiday on Monday.

The yen gained despite sharply diverging monetary policy expectations. On Thursday, the Bank of Japan held its policy steady as expected and maintained a pledge to cap long-term interest rates around zero.

BOJ Governor Haruhiko Kuroda said an uptick in inflation toward 1 percent won't immediately trigger an interest rate hike, signaling that Japan will stick to its ultra-easy policy even as other major economies eye withdrawing stimulus.

Kuroda, who heads to Germany for a Group of 20 finance leaders' meeting this weekend, shrugged off market speculation the BOJ may raise its target on bond yields later this year, when consumer inflation is expected to approach 1 percent due mostly to a rebound in fuel costs and rising import prices from a weak yen.

"The Fed is going to continue to continue to hike rates, so we don't see any reason to aggressively buy the yen more," said Masashi Murata, senior strategist at Brown Brothers Harriman in Tokyo.

U.S. data on Thursday underscored the U.S. economy's solid underpinnings. Homebuilding increased 3.0 percent last month and jobless claims fell in the latest week.

The recently resurgent euro added 0.1 percent to $1.0770, up 0.9 percent for a week in which Dutch center-right Prime Minister Mark Rutte fended off an election challenge from anti-Islam politician Geert Wilders. Concerns about the election outcome had pressured the single currency.

The European Central Bank will decide at a later time whether to raise interest rates before or after ending its bond purchase program, ECB policymaker Ewald Nowotny told a newspaper on Thursday.

Sterling edged down 0.1 percent to $1.2349 after hitting a two-week high of $1.2373 overnight, after the Bank of England kept rates on hold but gave a handful of hints in voting results and its minutes that it might raise them soon.

The pound was up 1.5 percent for the week, after outgoing BoE policymaker Kristin Forbes unexpectedly voted for a rise in interest rates, and others signaled it would not take much for them to follow suit.

So currently market behaves quiet and follows our yesterday setup, up to 1.08 area. The major conclusion that we could make from Fed statement is investors are free for 3-4 months until next rate hike and could invest money in US assets, such as equities. This also is confirmed by solid drop in US Treasuries yield. That's why we see such kind of reaction against USD, not only on FX, but across the board.

Daily chart shows that we have solid resistance around 1.08 area and EUR is already touching it's lower border - MPR1. As EUR stands close to daily OB level, hardly on Friday it will make challenge to break it up. Most probable scenario is gradual action up right to 1.08 AB-CD target:

Thus, we continue to follow our yesterday's tactical scenario that is based on hourly butterfly pattern. Also pay attention that EUR has broken above WPR1. IT means that current upside action is not a retracement and has chances to be continued next week:

Meantime, today we do not expect any action above 1.08 resistance area and daily 0.618 AB-CD target.